Most traders like moving averages for one reason: they turn noisy price action into a clearer line you can react to. The problem is lag. The smoother the line, the later it responds, which can be frustrating in fast trends and sharp breakouts. The Triple Exponential Moving Average (TEMA) was built to reduce that lag while keeping a moving average style line you can actually use on a chart.
Think of TEMA as an EMA based line that is pulled closer to price by combining three EMA layers in a way that cancels part of the delay. It is still a moving average, so it will always react after price, but compared with a standard EMA of the same period, TEMA usually turns sooner and hugs price more tightly.
If you are not fully comfortable with how EMA itself weights recent candles more heavily, start with this internal reference first: Exponential Moving Average (EMA). TEMA builds on that same concept.
The simple calculation behind TEMA
You do not need to compute it by hand to use it well, but understanding the structure helps you predict its behavior.
- Compute EMA1 as the EMA of price over N periods
- Compute EMA2 as the EMA of EMA1 over N periods
- Compute EMA3 as the EMA of EMA2 over N periods
Then combine them:
TEMA = (3 × EMA1) − (3 × EMA2) + EMA3
That combination is the key idea. EMA2 and EMA3 are progressively smoother and more delayed than EMA1. By subtracting three times EMA2 and adding EMA3, the final line often tracks price with less lag than EMA1 alone, but without becoming as jagged as simply using a much shorter period EMA.
A practical implication: because TEMA needs multiple EMA layers, it needs more historical bars before the values stabilize. Early chart values can be less reliable if the platform has limited history loaded.
Common periods traders use and why those settings show up
There is no single best period because the period controls the tradeoff between responsiveness and stability. What you will see most often is traders using TEMA in the same “families” of periods they use for EMA, just with the expectation that TEMA will react a bit faster for the same number.
A simple way to think about common use cases is this short list:
- Short term trend and momentum context: 5 to 14
- Swing trend line and pullback structure: 20 to 35
- Broader trend filter: 50 and higher
On daily charts, many traders gravitate toward 10, 20, 21, 30, or 34 because those periods balance signal speed with fewer random flips. For faster momentum names, shorter settings can keep you aligned with the move, but they can also increase whipsaws. On intraday charts, traders often shorten periods further because the noise level is higher and trends develop faster, but the same rule applies: shorter means more flips.
If you want a useful comparison point, DEMA is a step between EMA and TEMA in terms of lag reduction. This link gives you that bridge: Double Exponential Moving Average (DEMA).
How TEMA tends to look and behave on charts
On a clean trend, TEMA usually appears as a smoother line that stays closer to price than an EMA of the same period. That closeness has two practical effects.
First, the slope changes earlier. When momentum fades, TEMA often flattens sooner than EMA, which can help you tighten risk or stop adding. Second, price tends to cross the line more frequently because the line sits closer to price. That can be helpful if you use price crosses as alerts, but it can also produce more “in and out” signals in choppy conditions.
Another behavior to expect is sharper turning points. Because TEMA is designed to reduce lag, the line can pivot quickly after strong candles. In fast breakouts, this makes it a good visual tool for staying with the move without waiting for a slower average to catch up.
Why traders use TEMA
TEMA is most useful when you want a moving average to act like a responsive guide rather than a slow anchor. Traders commonly use it in three ways.
One is as a trend line for “stay with it” decisions: if price respects the line during pullbacks, the trend is behaving. Another is as a momentum gauge: a rising TEMA with price holding above it suggests persistent demand, while repeated closes below it suggest weakening pressure. The third is as a crossover component: pairing a fast TEMA with a slower moving average can create earlier trend change signals than two slower averages, but those signals should be filtered because faster signals also mean more false positives.
When TEMA tends to work best and why
TEMA tends to shine when price action is directional and orderly. In sustained trends, the reduced lag helps you respond to genuine changes earlier, while the smoothing helps you ignore some candle to candle noise.
It also tends to work well in “momentum pause then continuation” patterns. When a strong stock consolidates and then pushes higher again, a responsive average can help you spot when the market is back in expansion mode. In that context, TEMA can act like a dynamic reference for pullbacks and re acceleration.
Another environment where TEMA can help is trend management after a breakout. When price is moving quickly, slower averages may be too far away to be useful for day to day decisions. A TEMA with a sensible period can stay relevant without forcing you to watch every candle.
When TEMA tends to fail and why
The main failure mode is sideways markets. When price oscillates in a range, a more responsive line will flip direction and generate frequent crosses that do not lead to follow through. This is not a TEMA problem so much as a moving average problem, but TEMA can amplify it because it is designed to react faster.
High volatility and gap heavy names can also reduce usefulness. If price jumps over the line repeatedly, cross based interpretations become noisy. In these conditions, TEMA can still be used as a directional reference, but it should not be treated as a stand alone trigger.
Finally, very short periods can turn TEMA into a “price follower” that looks great in hindsight but provides unstable guidance live. If you find yourself reacting to every cross, the period is likely too short for the timeframe, or the market regime is not trending.
Summary
TEMA is a lag reducing moving average built from three EMA layers combined as TEMA = (3 × EMA1) − (3 × EMA2) + EMA3. Compared with a standard EMA of the same period, it usually turns sooner and tracks price more closely, which can be helpful for trend following in directional markets. Common periods cluster around short term momentum settings like 5 to 14, swing structure settings like 20 to 35, and slower trend filters like 50 and higher. It tends to work best in clean trends and momentum continuation patterns, and it tends to fail in range bound chop and highly erratic price action where frequent crosses create false signals.